SECTION 8.0

MSHCP FUNDING/FINANCING OF RESERVE ASSEMBLY AND MANAGEMENT

8.1 INTRODUCTION

The Western Riverside County MSHCP was developed to meet the legal requirements of the Federal Endangered Species Act (FESA) and the Natural Communities Conservation Planning (NCCP) Act, and to address the broader relationship of conservation planning to the Riverside County Integrated Project. In this context, the MSHCP implements national and state policy and is a critical element in assuring the quality of life in the region for future generations. As a national and state priority, the Conservation of Endangered Species must be supported by state and federal governments. Local jurisdictions and stakeholders, by funding their share of the costs of implementing the MSHCP, recognize their responsibility in planning for the future of the region and in addressing species Conservation. Funding is an essential element of the Western Riverside County MSHCP. It will be used to mitigate the effects of public and private development projects that the MSHCP is intended to facilitate. Funding to mitigate the effects of state projects will be provided by state permit holders in proportion to their impacts within the Plan Area. Funding to mitigate the effects of local projects will be spread equitably among public and private sources to balance the costs and benefits. New Development will be responsible for mitigating the impacts of more than 330,000 residential units and associated commercial and industrial Development projected to be built over the next 25 years. The MSHCP Funding Plan anticipates that the MSHCP Conservation Area will be assembled by the end of this 25-year period.

Over the remaining 50 years of the State and Federal Permits, local mitigation will contribute to the long-term management and monitoring of the MSHCP Conservation Area. The Cities and County will impose a local mitigation fee on all new Development to support the acquisition of Additional Reserve Lands. Government Code Section 66001 requires a legal nexus between the purpose of this fee and the benefit to the properties upon which the requirement to pay the fee is imposed.

➤ Regional Infrastructure

The MSHCP will facilitate the timely development of critical local and regional infrastructure. Adequate local infrastructure is critical to the economic development of the region and the long-term fiscal health of each Jurisdiction in the region. Although the MSHCP Financing Plan directly supports the development of critical local infrastructure, it does not rely on the economic gains resulting from this Development as a financing mechanism. These economic gains directly benefit all local jurisdictions.

➤ Assembly of Additional Reserve Lands

The Local Funding Program will address the local funding requirements for the local acquisition of Additional Reserve Lands (56,000 acres) and for the management of the Additional Reserve Lands locally acquired and existing local lands (152,000). Table 8-1 provides a breakout of the acreage for each of these and how they relate to the overall requirements for the Reserve Assembly.

TABLE 8-1 ASSEMBLY OF ADDITIONAL RESERVE LANDS
	New Conservation Total (Acres)	New Conservation Counted as Mitigation (Acres)	Local Management & Monitoring Obligation (Acres)
State and Federal Acquisition*	56,000	6,000
Local Acquisition	56,000	56,000	56,000
Sub-total Acquisition	112,000	62,000	56,000
Conservation Through Development Review	41,000	41,000	41,000
Total Additional Conservation	153,000	103,000	97,000
Existing Local Lands (See Section 4.2.2)			55,000
Total Additional and Existing			152,000

* Includes mitigation provided by DPR and Caltrans permitted projects

8.2 ESTIMATED COSTS OF PLAN IMPLEMENTATION

The MSHCP Financing Plan for the local portion of Reserve Assembly has two main components: an analysis of the costs of implementing the MSHCP and an analysis of the local tools for doing so.

The total local cost for the MSHCP is the sum of the following five elements:

1. Land Acquisition Costs
2. Management Costs
3. Monitoring Costs
4. Adaptive Management Costs
5. Administrative Costs

8.2.1 Total Local Program Costs

Local program costs to implement the MSHCP will include the local Jurisdiction's costs to acquire 56,000 acres of Additional Reserve Lands; the cost of management, Adaptive Management, monitoring 152,000 acres (the 56,000 acres, the 41,000 conserved through the development process, and approximately 55,000 acres of existing local conservation lands); and the local costs associated with administering the MSHCP. Table 8-2 outlines the anticipated local costs to fully implement the MSHCP.

TABLE 8-2 TOTAL LOCAL PROGRAM COSTS (not adjusted for inflation) 25 years and 75 years
Program Costs	First 25 years	75 years
Additional Reserve Lands Acquisition (56,000 acres)	$733.6M	$733.6M
Preserve Management (152,000)	$111M	$424.5M
Adaptive Management (152,000)	$44.5M	$214.3M
Biological Monitoring (152,000)	$34.7M	$112M
Program Administration	$30M	$ 55M
TOTAL COSTS	$953.8M	$1,539.4M

8.3 COSTING THE LOCAL IMPLEMENTATION PROGRAM

8.3.1 Acquisition Costs for Additional Reserve Lands

The single most important element to the success of the MSHCP is the timely acquisition of lands needed to assemble the Additional Reserve Lands. For purposes of the Financing Plan, the Permittees' projected cost to acquire 62,000 (56,000 local and 6,000 state) acres of private lands is approximately $812,200,000. Of this amount approximately $733,600,000 will be the responsibility of the Local Permittees and $78,600,000 will be the responsibility of the State Permittees.

The range of land values in the MSHCP Criteria Area is anticipated to be from $1,500 per acre or less to over $40,000 per acre depending on such variables as location, natural constraints, access, availability of utilities, zoning and land use entitlements. Furthermore, the cyclical nature of land Development in Riverside County adds to the volatility of land values. During the course of assembling the MSHCP Conservation Area, inflation, economic cycles, supply and demand for housing in the region will all impact the actual costs of acquiring land. Local land acquisition costs are anticipated to average $13,100 per acre based on the actual costs of lands acquired to date and an analysis by Area Plan of recent land sales (see Appendix B-01 of this Volume I document). The anticipated acquisition costs are shown in Table 8-3. It is likely that the majority of these costs will be incurred in the first 10 years of the Plan.

TABLE 8-3 LOCAL LAND ACQUISITION COSTS
		LAND ACQUISITION COSTS
	Acres	Average Cost per Acre	Total
Local Conservation	56,000	$13,100	$733,600,000
State Conservation	6,000	$13,100	$ 78,600,000
TOTAL			$812,200,000

8.3.2 Reserve Management Costs

The basic management costs include: ranger patrol, trash removal, access control, other management activities to preserve existing conservation values, and managing public access but not providing programs to the public. Management costs, though varying among reserves, are anticipated to be $55 per acre per year for the newly acquired lands and $17 per acre per year for the lands already in local public ownership, which already have management programs in place (see Table 8-4 below). The additional management costs would supplement the existing funding. Appendix B of this document provides supporting data for the projected management costs based on management proposals from the Center for Natural Lands Management and from the Riverside County Regional Parks and Open Space District. The projected costs are within the range of costs established by these proposals. As Additional Reserve Lands are acquired, the Western Riverside County Regional Conservation Authority (RCA) will select one or more land managers to perform management duties.

TABLE 8-4 LOCAL RESERVE MANAGEMENT
		LAND MANAGEMENT COSTS
	Acres	Average Cost per Acre per Year	Total for 25 years
New Conservation	97,000	$55	$87,609,500
Existing local lands (supplemental)	55,000	$17	$23,375,000
TOTAL			$110,984,500

8.3.3 Biological Monitoring Costs

Biological monitoring will be used to establish baseline conditions for properties as they come into the MSHCP Conservation Area. Annual monitoring programs will determine the status of species, groups of species and habitat types. Costs are anticipated to range from $1.6 to $2.4 million per year. The local obligation will be approximately $1.0 to $1.5 million per year (see Section 5.0 for a description of the management and monitoring programs). Appendix B-03 of this document provides an analysis of the annual staffing requirements and anticipated costs.

8.3.4 Program Administration Costs

Program Administration costs will cover a portion of the RCA's, County's and Cities' costs to perform the daily activities necessary to implement the Plan as required under the terms of the Implementing Agreement. Staff for the RCA and staff from the Cities and County working on a specific project will charge their time directly to that project either through the County's Deposit Fee Program or the Processing Fees charged by Cities. Staffing for the RCA and its committees, annual reporting and other costs not directly related to a specific case will be funded under the MSHCP's overall funding program. Appendix B-04 of this document contains a budget for the RCA, as well as an estimate of annual costs for the RCA that will be funded through the administrative costs. The annual estimate is approximately $1.2 million for the first 25 years. Once the acquisition phase is completed, the major role of the RCA will shift to management, in particular, administering the management and monitoring programs. Approximately $500,000 per year for the remaining life of the Plan is anticipated to support the RCA's reporting and coordinating role. The local administrative program is described in Section 6.6 of this document.

8.3.5 Adaptive Management Costs

Adaptive Management costs include funding for pilot projects to evaluate the best management tools to apply in the MSHCP Conservation Area; studies to react to findings of the monitoring program to address needs of individual species, groups of species or habitat types; programs to enhance the conservation values of properties in the MSHCP Conservation Area; and funds to address changed circumstances as described in Section 6.8.3 of this document. Adaptive Management is a component of the overall management of the MSHCP Conservation Area. The local funding program will provide a pool of funds of approximately $100 million at the end of the 25 year acquisition period, $70 million of this amount would go toward the endowment for Adaptive Management. At a 5% rate of return, this endowment will provide approximately $3.5 million per year to undertake Adaptive Management activities. In addition, the local funding plan anticipates an amount for Adaptive Management being available annually over the first 25 years. This amount increases proportionally to the cumulative amount of locally acquired lands. An annual prioritization of programs to fund under Adaptive Management will be made by the RCA. The Cash Flow Analysis in Appendix B-05 of this document reflects both the annual amount available for Adaptive Management and the build up of a MSHCP Conservation Area to fund the endowment by year 25.

8.3.6 Use of Management and Monitoring Funds to Benefit the Total MSHCP Conservation Area

The local costs for implementation are predicated on the local conservation component of the Plan. The Local Permittees and the Wildlife Agencies anticipate that funds pooled under the Plan will benefit the overall management of the entire MSHCP Conservation Area. Annually, the RCA will approve a Management and Monitoring program to allocate available funding to further the conservation goals of the MSHCP. The agreement of the Local Permittees to use local funds to further the overall goals of the Plan shall not create additional obligations of the Local Permittees beyond what is otherwise called for in the Plan.

 

8.4 LOCAL IMPLEMENTATION PLAN

The Local Implementation Plan utilizes the HANS Process as the primary mechanism for implementing the MSHCP (see Section 6.1.1 for the text of the HANS Process). The local Conservation of Additional Reserve Lands will occur under HANS using one or both of the following approaches or using a combination of the two:

1. Dedications of land provided through the Cities and County Development Review process for new Development and through the application of incentives.
2. The acquisition of lands from willing sellers.

8.4.1 Development Review

Through the development review process, approximately 41,000 acres of land are anticipated to be conserved to aid the assembly of Additional Reserve Lands. Local land use powers will be used only to the extent that they represent local, state, or federal regulations (other than those resulting from the FESA or CESA). The MSHCP is not intended to create new regulatory burdens on property owners that would not otherwise exist in the absence of a MSHCP. The assumption of long-term maintenance and management and potential property tax savings resulting from the conveyance of land constitutes the primary form of compensation to the property owner for lands conserved as a result of conditions of approval.

Under the HANS Process described in Section 6.1.1, a variety of incentives may be offered to land owners/developers to fully or partially compensate them for the Conservation of their lands.

Incentive programs:

1. Waiver and/or reduction of fees
2. Fast track processing
3. Density bonuses
4. Clustering
5. Density transfers
6. Property reassessment
7. Others that may be developed.

Projecting the number of acres that will be conserved through the development review process is based on an analysis of land use data and a review of historic trends. The land use data used in this analysis are discussed in Appendix B-06 of this document. This analysis is based on the full implementation of the Rural Incentives Program and the General Density Bonus and Incentive Program proposed to be implemented under the County's New General Plan (for a discussion of these programs, see the new Riverside County General Plan).

8.4.2 Conservation Tools Not Requiring Full Acquisition

The following section describes tools for conserving land without its being directly acquired. It discusses how Conservation can occur using the incentives proposed under the HANS process and the County's New General Plan. The use of incentives is a key element of the MSHCP implementation program. As the implementation process proceeds, an analysis of actual Conservation compared with this projection of Conservation will be ongoing as part of the Reserve Assembly accounting efforts described in Section 6.7. Based on this analysis, the incentive programs may be modified, additional incentives offered, and conservation projections revised.

Tool 1: Density Bonus/Clustering in Rural and Open Space Lands

This tool utilizes the Rural Incentives Program of the Riverside County General Plan to achieve Conservation of lands by allowing rural property owners to obtain a density bonus if they conserve all or a portion of their lands for open space or Conservation. In addition, the rural property owner may cluster his allowable density on the least environmentally sensitive portions of the property to obtain incentives in return for conserving the remainder of the property. A more detailed discussion of this program is presented in the County's New General Plan.

Historic data reveals that approximately 0.85% of the rural acreage has been subject to a development application annually for the past several years (according to an analysis by the Riverside County Planning Department). As the County's population increases, some increase is anticipated in the rate of Development in rural areas.

Projected Conservation
Acres of vacant rural and open space lands in Criteria Area	165,532 acres
Adjusted for Conservation in Tools 3 below (see Appendix B-06 of this document)
Estimated % developed over next 25 years based on historic trend of .85% per year	35%
Number of acres proposed for Development     0.35 x 165,532 =	57,936 acres
Assumption: 50% of those proposing Development will utilize tool	50%
Number of acres utilizing tool     0.50 x 57,936 =	28,968 acres
Goal to achieve 50% Conservation under incentive program.	50%
Number of acres conserved 0.50 x 28,968 =	14,484 acres

Tool 2: Density Transfers and Bonuses, Historic Open Space Dedications in Community Development Areas

This tool utilizes the Density Incentives Program in the Riverside County General Plan to achieve Conservation, especially in larger specific plans. This tool recognizes that most development projects provide some amount of open space and avoid portions of the property that are difficult to develop. Because there is little experience with the Density Incentives Program, anticipating the number or percentage of acres conserved is difficult. For the purpose of this analysis, we have anticipated a 50% conservation goal. Annual monitoring of actual acreage conserved may result in a revision of this goal.

Projected Conservation
Acres of vacant Community Development and Agricultural lands in Criteria Area	51,800 acres
Estimated % developed over next 30 years	80%
Number of acres proposed for Development     0.80 x 51,800 =	41,440 acres
Goal to achieve 50% Conservation under incentive program.	50%
Number of acres conserved 0.50 x 41,440 =	20,720 acres

Tool 3: Wetlands Conservation

Existing state, federal, and local regulations restrict Development in wetlands. These regulations will remain in place and the effects of Development on wetlands will be avoided or minimized. (For a discussion of wetlands conservation, see Section 6.1.2 of this document).

Projected Conservation
Acres of mapped Wetlands Habitat in Criteria Area	6,922 acres
Goal to achieve 80% Conservation under incentive program.	80% *
Number of acres conserved 0.80 x 6,922 =	5,537 acres
Total Projected Conservation using the 3 Tools	40,741 acres

*Note: This calculation is based on 80 % of wetlands mitigation/Conservation contributing to assembly of the Additional Reserve Lands.

➤ Requirements for Conservation Tools to Contribute to the MSHCP Conservation Area

Conservation achieved under the tools described above must:

1. Meet the Conservation Criteria.
2. Contribute to the overall design of the MSHCP Conservation Area.
3. Be contiguous with other conservation parcels or otherwise be consistent with the design criteria of the MSHCP Conservation Area for that Area Plan.

Under these requirements, all lands conserved using the conservation tools may not be counted toward the Reserve Assembly. In some instances the land may not contribute to Reserve Assembly until subsequent Conservation either through the use of the tools or through other Conservation means has allowed configuration of the lands consistent with MSHCP goals and Conservation Criteria.

8.4.3 Local Permittees' Acquisition of Additional Reserve Lands

Approximately 56,000 acres will be conserved either through direct acquisition from willing sellers or through the purchase of conservation easements or other mechanism that results in the permanent Conservation of the lands. The HANS process will result in the creation of a list of properties to be acquired on a first-in – first-out basis as funding becomes available. In addition, acquisitions may occur outside of the HANS process as opportunities arise to conserve important properties that will benefit the MSHCP Conservation Area. Acquisitions may be used to fill in critical gaps in the MSHCP Conservation Area and strategically consolidate holdings in an area to allow the conservation value of previously conserved properties to be fully realized.

8.4.4 State Permittees' Acquisition of Additional Reserve Lands

State Permittees will also acquire lands to meet their mitigation obligations under the MSHCP. These acquisitions may take the form of conservation banks or additions to existing state or federally owned conservation areas.

➤ Caltrans Acquisition of Additional Reserve Lands

Caltrans will be a State Permittee and will contribute to assembly of the Additional Reserve Lands and to management and monitoring of the Additional Reserve Lands. Within the first eight years of the Permit, Caltrans will acquire two Additional Reserve Land areas, one of approximately 2,000 acres in the eastern portion of the Criteria Area and one of approximately 1,000 acres in the western portion of the Criteria Area. The Additional Reserve Land areas shall, if at all Feasible, be acquired in close proximity to new highway projects, improvement projects for existing highways, or wildlife movement corridors. (The locations of the Additional Reserve Land areas shall be determined in consultation with the Wildlife Agencies.)

The estimated costs for the acquisition of these lands is $36,000,000. The western Additional Reserve Land area will be located within the Criteria Area in the vicinity of I-15, where land prices range from $8,000 to $40,000 depending on the level of entitlements. The estimated cost for establishing the western area, based on $20,000 per acre, is $20 million. In the eastern portion of the Criteria Area, land prices range from $1,000 to $12,000 per acre, and the estimated cost for the eastern area is $16 million based on $8,000 per acre. The estimated cost per acre for both areas is based on selecting a mid-range cost per acre and reflects cost per acre of recent acquisitions and/or appraisals funded by the Wildlife Conservation Board, the land acquisition arm of CDFG.

Caltrans will either establish endowments or transfer and fund three positions within the CDFG for the management and monitoring of Additional Reserve Lands. Two positions will be assigned primarily to management and one position to biological monitoring. The estimated funding for the three positions (salary and benefits for three Staff Environmental Scientists plus support funds) is $350,000 annually in current dollars. As an alternative, Caltrans may establish an endowment account pursuant to the required Conservation Banking Agreement for the areas in the sum of approximately $9.6 million ($6.4 million for management and $3.2 million for monitoring). A 5% annual return rate on funds deposited in the state investment fund was used to calculate the size of the endowment. In addition, the funding level anticipates approximately $50,000 of the annual interest on the endowment will be returned to the principle to account for inflation over time. The specific amount of the management portion of the endowment will be determined at the time the specific conservation bank lands are identified and the Conservation Banking Agreement is developed. The amount will be based on the analysis of the cost of management using the Property Analysis Report (Center for Natural Land Management, 1999) or similar methodology. Such a Conservation Banking Agreement will provide appropriate assurances to Caltrans regarding unused mitigation credits for their Covered Activities.

The funds used by Caltrans for the acquisition of Additional Reserve Lands would be from State Transportation Improvement Program funds.

➤ State Parks Acquisition of Additional Reserve Lands

State Parks has the following obligations under the MSHCP and the IA:

1. For Non-OHV activities, State Parks will implement the necessary requirements to fulfill the purposes of the Permits, the MSHCP and the IA for Covered Activities. Such requirements include: (1) compliance with the policies for the Protection of Species Associated with Riparian/Riverine Areas and Vernal Pools as set forth in Section 6.1.2 of this document ; (2) compliance with the policies for the protection of Narrow Endemic Plant Species as set forth in Section 6.1.3 of this document; (3) conduct surveys as set forth in Section 6.3.2 of this document; (4) compliance with the Urban/Wildlands Interface Guidelines as set forth in Section 6.1.4 of this document; and (5) compliance with the Best Management Practices and the Siting Requirements and Design Criteria as set forth in Section 7.0 and Appendix C of this document.
2. For OHV activities, prior to construction of the OHV Park, State Parks will contribute 3,000 acres of Additional Reserve Lands in the Badlands, within the Criteria Area, as mitigation for impacts associated with up to 600 acres of active riding areas resulting from the establishment of a State Vehicular Recreational Area in the Badlands. As discussed in Section 7.3.6 of this document, the actual disturbed active riding area could expand by 100 acres for each additional 500 acres of Habitat conserved within the Criteria Area in the vicinity of the State Vehicular Recreation Area.
3. For Non-OHC activities, State Parks' Take Authorization for Covered Activities is contingent on the preparation of unit management plans pertaining to each Covered Activity, which will reflect the scope of work and obligation of State Parks to manage and monitor State Parks land within the MSHCP Conservation Area pursuant to Section 5.0 of this document. The unit management plans must be reviewed and approved by Wildlife Agencies.
4. As provided in Section 5.0 of this document, State Parks will provide for the management and monitoring of the 3,000 acres of Additional Reserve Lands referred to in (B) above, and any additional mitigation lands provided under that subsection. Management and monitoring will be accomplished by DPR through: (1) establishing an endowment with the CDFG to fund two positions for the management and monitoring of the Additional Reserve Lands; or (2) transferring and funding two positions within CDFG; or (3) dedicating and funding two DPR positions for the management and monitoring of the Additional Reserve Lands. One position will be assigned primarily to management and one position will be assigned to the MSHCP biological monitoring team. The estimated funding for the two positions (salary and benefits for two Staff Environmental Scientist plus support funds) is $250,000 annually in current dollars.
5. Participate as a member of the Reserve Management Oversight Committee as set forth in Section 6.6 of this document.
6. Carry out all other applicable requirements of the MSHCP, the IA and the Permits, including but not limited to, Section 7.3.6 of this document.

8.5 LOCAL FUNDING PROGRAM

The following local funding plan describes the local commitment for funding Reserve Assembly, Management, and Monitoring.

The local funding program includes funding from a variety of sources, including but not limited to, regional funding resulting from the importation of waste into landfills in Riverside County, mitigation for regional public infrastructure projects, mitigation for private infrastructure projects, mitigation for private Development, funds generated by local or regional incentive programs that encourage compact growth and the creation of transit-oriented communities, and dedications of lands in conjunction with local approval of private development projects.

The local funding program will fund the local portion of:

• Land acquisition
• Management
• Monitoring
• Adaptive Management
• Plan administration

8.5.1 Funding Sources

Local funding sources include funding from both public and private developers and regional entities in an effort to spread the financial burden of the MSHCP over a broad base. The mix of funding sources provides an equitable distribution of the cost for local mitigation under the MSHCP. In addition to equitably distributing mitigation for local projects, utilizing a mixture of funding sources will help ensure the long-term viability of the local funding program because a temporary decline in funding from one source may be offset by increases from another. The proposed local funding sources are described below and include:

• Local Development Mitigation Fees
• Density Bonus Fees
• Regional Infrastructure Project Contribution
• Landfill Tipping Fees
• Other Potential New Revenue Sources

➤ Local Development Mitigation Fees

New Development affects the environment directly through construction activity and cumulatively through population bases that result from Development. Government Code Section 66000 et seq. allows cities and counties to charge new Development for the costs of mitigating the impacts of new Development. The Cities and County will implement a Development Mitigation Fee pursuant to the MSHCP; this fee will be one of the primary sources of funding the implementation of the MSHCP. The fee ordinance adopted by the Cities and the County will provide for an annual CPI adjustment based upon the Consumer Price Index for "All Urban Consumers" in the Los Angeles-Anaheim-Riverside Area, measured as of the month of December in the calendar year which ends in the previous Fiscal Year. There will also be a provision for the fee to be reevaluated and revised should it be found to insufficiently cover mitigation of new Development. A fee of approximately $1,500 per residential unit (or an equivalent fee per acre) and $4,800 per acre of commercial or industrial Development was used in the revenue projection shown in Appendix B-05 of this document. The projected revenues from the Development Mitigation Fee are anticipated to be approximately $540 million over the next 25 years. A nexus study is required to demonstrate that the proposed fee is proportionate to the impacts of the new Development.

➤ Density Bonus Fees

The New Riverside County General Plan creates a number of incentive plans that have the potential both to further the goals of the County's General Plan and to facilitate the implementation of the MSHCP. Section 8.4.2 above discusses the use of the Rural Incentive Program to aid in the Conservation of lands through non-acquisition means. An additional component of the Incentive Program enables developers to acquire the right to develop at an additional 25% increase in density by providing enhancements to their projects and by paying a "Density Bonus Fee." The fee is anticipated to be $3,000 – $5,000 per additional unit. This program offers a significant incentive to developers when compared with the typical cost of creating a new buildable lot.

The Density Bonus program is new to Riverside County, and it is, therefore, difficult to project annual revenues. The Local Funding Program assumes that between 10% and 20% of the residential units built in the unincorporated County area will participate in the incentive program and that only 50% of the revenues of the program will be committed to the MSHCP, with the remaining portion staying in the local community in which the additional units are located to provide additional amenities that will help offset the greater density. Of the 330,000 units projected to be built over the next 25 years, 10% (or 33,000 units) are assumed to be built utilizing the Density Bonus Fee resulting in $132,000,000 in revenues of which 50% (or $66,000,000) will be allocated to the MSHCP.

➤ Regional Infrastructure Project Contribution

Regional infrastructure projects directly affect the environment not only through the effect they have on species and their Habitats, but also by facilitating continued new Development. It is appropriate, therefore, for regional infrastructure projects to contribute to Plan implementation . Four general categories of infrastructure projects have been identified:

• Transportation Infrastructure
• Regional Utility Projects
• Local Public Capital Construction Projects
• Regional Flood Control Projects

Transportation Infrastructure

The RCIP has identified the need for approximately $12 billion in new transportation infrastructure to support the Development proposed for the next 25 years. Each new transportation project will contribute to Plan implementation . Historically, these projects have budgeted 3% – 5% of their construction costs to mitigate environmental impacts. The local funding program anticipates that more than one-half of the $12 billion cost of contribution to acquisition of Additional Reserve Lands will be funded locally and will result in approximately $371 million in contribution over the next 25 years as discussed below.

► Riverside County's ½ cent sales tax for Transportation

In 1988, Riverside County voters approved a measure to increase local sales tax by ½ cent to fund new transportation projects (Measure A). The sales tax measure is due to be reauthorized in 2002. Under the reauthorization, $121 million will be allocated as local contribution under the MSHCP. (For further information on the sales tax measure, see Section 13.5 of the MSHCP Implementing Agreement and Appendix B-07 of this document).

Regional Utility Projects

As Riverside County's population doubles over the next 25 years, new regional utility infrastructure will be required. Since the utilities are not Permittees under the MSHCP, they may choose to mitigate under the Plan or seek their own regulatory permits. In either case, their mitigation will be focused on the objectives of the MSHCP and will contribute to the local implementation funding. No estimate of the number of projects or the scope or costs is available at this time; consequently, no estimate of mitigation funding has been made. The Permittees expect that regional utility projects will contribute to the implementation of the MSHCP and provide an additional contingency should other revenue sources not generate the projected levels of funding or should implementation costs be higher than projected.

Local Public Capital Construction Projects

Local public capital construction projects may include construction of new schools, universities, City or County administrative facilities, jails, courts, juvenile facilities, parks, libraries, or other facilities that serve the public. These projects will be mitigated under the MSHCP and will utilize a per acre mitigation fee based on the fee then in place for private, commercial and industrial Development. No attempt has been made to estimate the number or magnitude of these projects. The Permittees expect that local pubic construction projects will contribute to the implementation of the MSHCP and provide an additional contingency should other revenue sources not generate the projected levels of funding or should implementation costs be higher than projected.

Regional Flood Control Projects

Flood control projects will receive coverage under the MSHCP for both new capital construction and for the maintenance of existing and new facilities. Preliminary estimates from the Riverside County Flood Control and Water Conservation District indicate that they will likely budget approximately $15 M in projects annually. Based on using 3% of capital costs, the District would be expected to contribute approximately $450,000 to $750,000 annually to MSHCP implementation. Since many flood control projects serve existing developed communities and therefore have less impacts than projects adding capacityty to serve new Development and may provide some conservation value especially in terms of Constrained Linkages, the District's contributions may average something below the 5% level on average.

 

➤ Landfill Tipping Fees

 

Riverside County has utilized revenues from public and private landfills in Riverside County to generate funding for conservation and open space projects for over a decade. In 1990, the County utilized $1 per ton tipping fee assessed all waste deposited in County landfills to fund the acquisition of the Santa Rosa Plateau and approximately $260,000 annually to fund the operation of the County Park and Open Space Districts. More recently, the County has negotiated agreements with two private landfills in the County to commit $1 per ton on all waste imported from outside Riverside County to Conservation within Riverside County.

El Sobrante Landfill

This privately owned landfill was permitted to expand its capacity to 10,000 tons per day in 2001. In approving the landfill expansion, the Riverside County Board of Supervisors authorized fifty cents per ton of the County's portion of the revenue from the landfill expansion to be applied to Conservation in addition to the $1 per ton that was committed under the landfill agreement. The projection of the annual tonnage and revenue for Conservation included in Appendix B-09 of this document reflects the $1.5 per ton commitment to Conservation. Over the life of the landfill, 60 million tons of imported waste are allowed. Sixty million tons at $1.5 per ton will generate $90 million for Conservation. The Cash Flow Analysis in Appendix B-10 of this document reflects the annual revenues from the El Sobrante Landfill.

County Landfills

The County Board of Supervisors, beginning in 1990, authorized $1 per ton for all in-county waste deposited in County landfills to go toward habitat and open space Conservation. After adjusting for the debt service on the Santa Rosa Plateau acquisition and an annual commitment to the Park and Open Space District, there is a projected annual balance of $400,000 that can be applied to additional Conservation under the MSHCP. Appendix B-09 of this document includes a projection of tonnage from in-County waste at County landfills. The Cash Flow Analysis in Appendix B-10 of this document reflects the annual revenues from the County landfills. Over the next 25 years, County landfills will contribute approximately $10 million to the implementation of the MSHCP.

Eagle Mountain

In 1997, the County approved the use of the old Kaiser mine at Eagle Mountain in eastern Riverside County as a regional landfill to serve primarily Los Angeles County. Subsequently, the Los Angeles County Sanitation District has acquired the rights to the Eagle Mountain Landfill and intends to begin operation of the landfill within the next decade. At this time, litigation is still pending that could prohibit the development of the landfill. The Development Agreement with the County would require the payment of $1 per ton for Conservation if the landfill is developed. Conservation needs in the Coachella Valley would have first priority over the revenues from the Eagle Mountain Landfill; however, some portion of the revenues would be available to support Conservation needs in Western Riverside County. The Permittees expect that the Eagle Mountain Landfill will provide funding to support implementation of the MSHCP over the life of the MSHCP. However, no revenue from the Eagle Mountain Landfill has been projected in the funding program at this time. These potential revenues provide a contingency should other revenue sources not generate the projected levels of funding or should implementation costs be higher than projected.

➤ Potential New Revenue Sources

The County and Cities may levy assessments to pay for services that directly benefit the property on which the fee is levied. Under current law, a local election may be required to initially levy the assessment or to confirm the assessment if a protest is filed. No such assessments are currently projected for the MSHCP. As the MSHCP Conservation Area is developed, however, its value as open space and for recreation opportunities may lend itself to a local funding program for ongoing management and enhancement. In more urban areas, which Western Riverside County will be in 25 years, local voters routinely approve such funding programs.

Other revenue opportunities may be realized over the next 25 years. The County, Cities, and RCA will explore new revenue sources to support the acquisition of the MSHCP Conservation Area and its long-term management and enhancement. A goal of any new fee would be to spread a portion of the costs for the MSHCP across as broad a regional base as possible.

TABLE 8-5 LOCAL PUBLIC/REGIONAL FUNDING SOURCES
Source Anticipated	$ Range	Requirements to Implement	Responsible Party
Private Funding Sources:
Cities and County Development Mitigation Fees	$539.6M	Approval of County Ordinance Approval of City(ies) Ordinance	County Cities
Density Bonus Fees	$66M	Approval of General Plan	County
Public Funding Sources
Local Roads	$121M	Approval of Measure A, local agreement on allocation	RCTC/County
Other Transportation	$250M	% of new road construction	RCTC/County
Other infrastructure Projects	$unknown	Project-by-project negotiation	County and Cities
El Sobrante Landfill	$90M	In place	County
County Landfills	$10M	In place	County
Eagle Mountain Landfill	$unknown	In place pending start-up	County
New Regional funding	$unknown	Voter approval	County and Cities
TOTAL LOCAL FUNDS	$1,076.6M

8.6 ADEQUACY OF FUNDING

The Permittees and the Wildlife Agencies will annually evaluate the performance of the funding mechanisms and, notwithstanding other provisions of the MSHCP, will develop any necessary modifications to the funding mechanisms to address additional funding needs. Additionally, this annual evaluation will include an assessment of the funding plan and anticipate funding needs over the ensuing 18 months for the purpose of identifying any potential deficiencies in cash flow. If deficiencies are identified through this evaluation, then the Permittees and the Wildlife Agencies will develop strategies to address any additional funding needs consistent with the terms and conditions of the MSHCP.

Additional funding needs may occur for a variety of reasons. The following section discusses potential causes of additional funding needs in the local funding program and how the need for additional funding will be addressed. As discussed below, Local Permittees will, to the extent allowed by law and consistent with the legal requirements governing local jurisdictions, respond to additional funding needs. Management and Monitoring costs are not anticipated to exceed projections except for inflation. Management and Monitoring budgets will be locally approved annually by the RCA.

8.6.1 Additional Funding Needs Resulting from Land

Acquisition Costs Increasing Faster than Revenues

Financing for land acquisition will be reviewed annually by the RCA and revisited as necessary during the life of the Plan to update cost and financing projections. Appropriate adjustments to revenue from funding sources will be made to meet the obligations of the MSHCP. If a need for additional funding is projected due to increases in land values that exceed revenue from local funding sources:

• Local funding sources will be adjusted to cover the need for additional funding,
• New funding sources will be identified to supplement existing funding.

8.6.2 Increased Funding Needs Resulting from Management or Monitoring Costs Increasing Faster than Revenues

The RCA will review financing for management and monitoring programs and will update cost and financing projections as necessary during the life of the MSHCP. The RCA will make appropriate adjustments to revenue from funding sources to meet the obligations of the MSHCP. If a need for additional funding is projected based upon increases in management or monitoring costs that exceed revenue from local funding sources:

• Local funding sources will be adjusted to cover the need for additional funding.
• New funding sources will be identified to supplement existing funding.
• Contingency funds will be utilized on a short-term basis to maintain management and monitoring requirements.
• Endowment funds may be advanced on a short-term basis to maintain management and monitoring requirements of the MSHCP.

8.6.3 Increased Funding Needs Resulting from Adaptive Management Costs Increasing Faster than Revenues or the Endowment Projection Not Being Met

Financing for ongoing Adaptive Management and for the Endowment for Adaptive Management will be reviewed annually by the RCA and revisited as necessary during the life of the MSHCP to update cost and financing projections. Appropriate adjustments to funding sources will be made to meet the obligations of the MSHCP. If a need for additional funding is projected due to increases in Adaptive Management costs that exceed revenue from local funding sources:

• Local funding sources will be adjusted to cover the need for additional funding.
• New funding sources will be identified to supplement existing funding.
• Contingency funds will be utilized on a short-term basis to meet the obligation for Adaptive Management.
• Endowment for Adaptive Management funds may be advanced on a short-term basis to meet the obligation for Adaptive Management.
• If the long-term funding projects reveal that the Endowment for Adaptive Management will not be reached by the end of 25 years:
• Local funding sources will be adjusted to cover the need for additional funding,
• New funding sources will be identified to supplement existing funding.

8.6.4 Need for Additional Funding Resulting From the Need to Acquire More than 56,000 Acres Locally Due to the Conservation Anticipated under Section 8.3.1

The tools proposed to achieve Conservation will be reevaluated and revised as necessary to be more effective:

• The Permittees will implement new tools to achieve Conservation.
• Local funding sources will be adjusted to cover the need for additional funding.
• New funding sources will be identified to supplement existing funding.

8.6.5 Revenue Collections and Land Acquisitions do not Keep Pace with Land Development

The local funding plan is intended to keep the local Conservation of Additional Reserve Lands to support Reserve Assembly roughly proportional with the amount of Development occurring in the Plan Area. Over the 25-year "acquisition period," the following schedule shall be used to determine if additional Conservation is needed to keep Development and Conservation in "rough proportionality."

Year	Projected % of Anticipated Residential, Commercial, and Industrial New Construction Developed (Appendix B-05)	Test for "Rough Proportionality" % of Local MSHCP Conservation Area Lands Conserved
5	22%	22%
10	43%	43%
15	64%	64%
20	82%	82%
25	100%	100%

 

 

If at the end of any five (5) year period the "rough proportionality" test has not been met, the Permittees and the Wildlife Agencies will meet within 90 days to begin to develop a strategy to address the need for a balance between Conservation and Development.

 

 

8.7 USE OF DEBT FINANCING TO ADDRESS NEED FOR CASH FLOW INCREASE

During the early years of the Plan, there is the potential for a number of property owners to offer their lands for sale or request consideration under the HANS Process for a determination of whether their property is needed for the creation of the MSHCP Conservation Area. This could result in a shortage of funding in one or more years despite revenues and other costs meeting the funding plan's projections. While the funding plan is proposed to be a "pay as you go" effort, a debt financing may be required to meet cash flow needs. The RCA has the ability to structure a debt financing. To facilitate a financing, especially in the early years when the history of the revenues is less well established, a State or Federal Loan Guarantee or other mechanism could provide credit enhancement to the RCA. Such a program could require new legislation at either the state or federal level. The RCA and the individual Permittees will collectively pursue such legislation. During the first three years, the RCA will develop a strategy for financing debt to support the MSHCP acquisition program.

8.8 LONG-TERM FINANCING FOR MANAGEMENT

A portion of the annual revenues generated under the MSHCP will be contributed toward management, Adaptive Management, monitoring, and administration of the MSHCP Conservation Area by the RCA (collectively referred to as management costs). There are two approaches for funding these activities beyond the 25 year acquisition period. During the first three years of the MSHCP, the RCA will determine which approach shall be used.

In approach 1, the MSHCP would fund the annual costs for management, monitoring, Adaptive Management, administration of the MSHCP Conservation Area and the cost of creating an endowment. The endowment will reach approximately $100,000,000 during the MSHCP's first 25 years. Proceeds from the endowment are anticipated to cover approximately one-half of the ongoing management costs for the locally conserved lands after the MSHCP Conservation Area is completely assembled. The remaining additional management costs will be provided by ongoing revenues or new revenue sources that will be developed once the acquisition phase is completed.

In approach 2, a long-term source of funding for all management costs could be put in place before the acquisition period has been completed. An endowment is created only to fund the Adaptive Management obligation of the MSHCP. During the first 25 years, the MSHCP would fund the annual costs for management, monitoring, Adaptive Management, administration, and the creation of the Endowment for Adaptive Management. This approach could either result in lowering costs during the acquisition period or allowing additional dollars to go toward acquisitions and thus shortening the time period required to assemble the MSHCP Conservation Area.

Under either approach, management and monitoring costs will increase over time, while acquisition costs will decline as the MSHCP Conservation Area nears completion. When the acquisition process has been completed, funding that was earmarked for acquisition will be shifted as allowed by law to support management and monitoring programs. For a 75-year cash flow analysis, see Appendix B-05 of this document.

The Management and Monitoring activities are anticipated to extend beyond the term of the Permit as the Conservation of the lands is in perpetuity. Therefore, while the Plan only discusses Management costs for the 75-year life of the Plan, the Permittees will have permanent responsibility for managing the conservation lands.

8.9 PARTICIPATION BY CITIES

All participating jurisdictions will adopt a uniform Development Mitigation Fee. All Cities in the MSHCP Plan Area are participating fully in the funding and implementation of the MSHCP. The MSHCP IA contains city-specific implementation requirements for cases in which a city desires an approach different from that proposed in the overall MSHCP.

8.10 APPROACH TO COSTS AND FUNDING PROJECTION

For purposes of projecting both costs and revenues, no adjustment for inflation has been made. To the extent feasible, revenue programs have built-in inflation adjustments. The locally approved Development Mitigation Fee adopted by both the Cities and the County will be adjusted periodically for inflation. The El Sobrante Landfill agreement provides for an inflation adjustment. The Riverside County Board of Supervisors can adjust for inflation the portion of the revenues that are dedicated to Conservation. Local infrastructure revenues that relate to the cost of the infrastructure projects will inflate over time as project costs increase. Acquisition, maintenance, and management costs will also tend to increase over time. The local funding program is based on allocating the revenues annually through the budgeting process of the RCA to fund the implementation of the MSHCP. If revenues do not keep pace with inflation, the Permittees will address the need for additional funding as discussed in Section 8.6.